Bank Insurance

DEFINITION of 'Bank Insurance'

A guarantee by the Federal Deposit Insurance Corporation (FDIC) of deposits in a bank. Created in 1989, the Bank Insurance Fund is the federal fund used to insure bank deposits of national and state banks, that are members of the Federal Reserve System. Bank Insurance helps protect individuals who deposit their savings in banks, against commercial bank insolvency. Each depositor is insured to at least $250,000 per bank.

BREAKING DOWN 'Bank Insurance'

The FDIC, an independent U.S. government corporation, was initiated under the Glass-Steagall Act of 1933. Its purpose was to insure bank deposits against loss and to regulate banking practices. The collapse of a great majority of banks in the United States, during the Great Depression, prompted the creation of the FDIC.

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RELATED FAQS
  1. Are all bank accounts insured by the FDIC?

    The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government that protects you against ... Read Answer >>
  2. Why are CDs (Certificate of Deposit) FDIC-insured?

    Find out why certificate of deposits (CDs) are insured by the FDIC and what the deposit requirements are for receiving insurance ... Read Answer >>
  3. Is a SE 401K covered by FDIC?

    Is it considered the same as an IRA? ... Read Answer >>
  4. Why is my 401(k) not FDIC-Insured?

    Learn about the Federal Deposit Insurance Corporation (FDIC) and whether its protection extends to 401(k) accounts or just ... Read Answer >>
  5. What are the Federal Reserve's guidelines on demand deposit accounts?

    Read about some of the Federal Reserve's requirements and guidelines regarding the treatment, safeguarding and processing ... Read Answer >>
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